Obama: 'Reluctant shareholder' in GM

President Barack Obama struck a cautious note Monday as he announced the bankruptcy of General Motors and the government’s decision to invest another $30 billion in the company, take a 60% ownership stake in the beleaguered automaker, and take control of a number of slots on the board of directors.

“We are acting as a reluctant shareholder because this is the only way to help GM succeed,” Obama said in nationally televised remarks delivered in the White House’s Grand Foyer He called the new effort “a credible plan that is full of promise.”

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“Our goal is to get GM back on its feet, take a hands off approach and get out quickly,” the president said.

He also took a moment to address the thousands of GM employees who will lose their jobs as the company sheds plants and workers to get back to profitability. “I know that you have seen more than your fair share of hard times,” Obama said. “I will not pretend that the hard times are over.”

Obama is clearly struggling with the tension between on the one hand being an owner of General Motors and a large swath of Corporate America and on the other trying to maintain the nation’s free-market capitalist tradition. “I recognize that this may give some Americans pause,” Obama said of the government’s giant GM ownership stake. But he said the massive global financial collapse of 2008 put the government in the “unwelcome position” of having to step in to prevent wider damage.

Speaking in a news conference in New York just a few minutes after the president finished, GM CEO Fritz Henderson said the government has not been heavy handed so far. “You heard the president,” Henderson said. “The automotive task force has been rigorous in its analysis, basically dissecting our plan, but with no real interest in running our business. We’re fine with that, I’m fine with that.”

With the GM deal, the federal government adds the iconic car company to the businesses it owns all or part of, along with AIG, Freddie Mac, Fannie Mae and other companies.

In a conference call with reporters on Sunday evening, several senior administration officials said they expect the company to go through a 60-90 day bankruptcy that will let the company shed about half of its crushing liabilities and eventually restructure itself to a point at which it can reduce the number of cars it must sell in a year to break even in an industry that is dramatically smaller. The officials said the car company will need to survive in an industry that sells just 10 million cars a year, down from 16 million.

GM will also have to let thousands of workers go and close a score of plants across the country in an effort to get to profitability.